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February 08, 2017

INDIANA COURT SAYS NO TO SILENCING ARBITRATION OPPONENT, ...

... SAYS YES TO "FAIRNESS."

In Watts Water Tech., Inc. v. State Farm Fire & Cas. Co., 66 N.E.3d 983, 986 (Ind. Ct. App. 2016), State Farm sued in subrogation after paying its policyholder's water damage claim. State Farm alleged a product liability claim against one Watts Water Technology arising out of a defective product.

The operative facts alleged by State Farm were that State Farm's policyholder purchased a water heater with defendant Watts's brand connector. Watts's brand connector failed, "causing water damage" to the policyholder's "home and property."

Watts "defended" as it were by filing a motion to compel arbitration. Unfortunately for Watts, as it turned out, the evidence showed that Watts's arbitration program expressly excluded arbitrating products liability claims arising out of defective products.

Watts's response to this fact was in part to show that trial judges in other States had ruled in its favor, requiring arbitration of certain claims allegedly arising out of its allegedly defective products. The Indiana appellate court refused to allow Watts to do this. The Indiana court ruled instead that Watts could not cut off the debate as it were on whether its product in this case would be defective.

The Indiana court said that it would not allow Watts to do this because it would not be fair.

P.S.

Also, although the court did not come out and say it in this case, very few arguments will succeed in any particular appellate court when those arguments are based on trial court decisions from other states.